It is important to note that the Fibonacci points should not be seen as concrete levels but rather guidelines or reference points. Price will not always trade at these exact levels. It is common to see price just falling short or pushing passed a level which can frustrate traders who look at exact levels. With reference to stop and limit orders, traders should give themselves some leeway for potential price fluctuations around the Fibonacci level.
This is the most simplistic form of the Fibonacci retracement within forex markets. The versatility of the Fibonacci retracement function means that it is not limited to one time frame as seen above. A more complicated approach involves several Fibonacci retracements acrosscan allow for multiple Fibonacci retracements drawn from major moves. The next article in the Fibonacci series will go into more depth with and practical examples to show how exactly traders can implement this strategy.
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